XML 28 R22.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Pension
 12 Months Ended
Dec. 31, 2019
Retirement Benefits [Abstract]  
Pensions Pension
The Company maintains defined benefit pension plans covering employees located in the United States as well as certain international locations. The majority of these plans are frozen, and all are closed to new employees. Benefits generally are based on compensation, length of service and age for salaried employees and on length of service for hourly employees. The Company’s policy is to fund pension plans such that sufficient assets will be available to meet future benefit requirements and contribute amounts deductible for United States federal income tax purposes or amounts required by local statute.
The Company also sponsors voluntary defined contribution plans for certain salaried and hourly U.S. employees of the Company. The Company matches contributions of participants, up to various limits in all plans. The Company also sponsors retirement plans that include Company non-elective contributions. Non-elective and matching contributions under these plans totaled $14,514, $16,076 and $16,747 for the years ended December 31, 2019, 2018 and 2017, respectively.
Information related to the Company’s defined benefit pension plans was as follows:
 
 
 Year Ended December 31,
 
2019
 
2018
 
 U.S.
 
 Non-U.S.
 
 U.S.
 
 Non-U.S.
Change in projected benefit obligations:
 
 
 
 
 
 
 
Projected benefit obligations at beginning of period
$
288,223

 
$
183,850

 
$
315,698

 
$
197,169

Service cost
809

 
3,893

 
852

 
4,383

Interest cost
10,955

 
4,037

 
10,824

 
4,207

Actuarial (gain) loss
28,771

 
17,756

 
(21,684
)
 
(3,001
)
Benefits paid
(14,625
)
 
(6,038
)
 
(17,467
)
 
(7,125
)
Foreign exchange translation
—

 
11

 
—

 
(10,697
)
Settlements
(58,198
)
 
(2,263
)
 
—

 
(4,974
)
Acquisitions/Divestiture
—

 
(16,953
)
 
—

 
2,778

Other
—

 
71

 
—

 
1,110

Projected benefit obligations at end of period
$
255,935

 
$
184,364

 
$
288,223

 
$
183,850

 
 
 
 
 
 
 
 
Change in plan assets:
 
 
 
 
 
 
 
Fair value of plan assets at beginning of period
$
265,019

 
$
47,692

 
$
275,767

 
$
52,026

Actual return on plan assets
50,488

 
6,948

 
(16,631
)
 
(746
)
Employer contributions
1,929

 
6,646

 
23,350

 
9,136

Benefits paid
(14,625
)
 
(6,038
)
 
(17,467
)
 
(7,125
)
Foreign exchange translation
—

 
2,399

 
—

 
(4,014
)
Settlements
(58,198
)
 
(2,841
)
 
—

 
(3,730
)
Acquisitions/Divestiture
—

 
—

 
—

 
2,145

Fair value of plan assets at end of period
$
244,613

 
$
54,806

 
$
265,019

 
$
47,692

 
 
 
 
 
 
 
 
Funded status of the plans
$
(11,322
)
 
$
(129,558
)
 
$
(23,204
)
 
$
(136,158
)


 
December 31, 2019
 
December 31, 2018
 
 U.S.
 
 Non-U.S.
 
 U.S.
 
 Non-U.S.
Amounts recognized in the consolidated balance sheet:
 
 
 
 
 
 
 
Other assets
$
2,677

 
$
1,887

 
$
524

 
$
433

Accrued liabilities
$
(1,021
)
 
$
(4,413
)
 
$
(1,011
)
 
$
(4,643
)
Pension benefits (long term)
$
(12,978
)
 
$
(127,032
)
 
$
(22,717
)
 
$
(131,948
)

Pre-tax amounts included in accumulated other comprehensive loss that have not yet been recognized in net periodic benefit (income) cost as of December 31, 2019 and 2018 were as follows:
 
December 31, 2019
 
December 31, 2018
 
 U.S.
 
 Non-U.S.
 
 U.S.
 
 Non-U.S.
Prior service costs
$
(96
)
 
$
(351
)
 
$
(116
)
 
$
(990
)
Actuarial losses
$
(61,184
)
 
$
(49,682
)
 
$
(84,857
)
 
$
(41,844
)

Pre-tax amounts included in accumulated other comprehensive loss that are expected to be recognized in net periodic benefit cost during the year ended December 31, 2020 are as follows:
 
 U.S.
 
 Non-U.S.
Prior service costs
$
(20
)
 
$
(206
)
Actuarial losses
$
(1,920
)
 
$
(3,029
)

The Company uses the corridor approach when amortizing actuarial gains or losses. Under the corridor approach, net unrecognized actuarial losses in excess of 10% of the greater of i) the projected benefit obligation or ii) the fair value of plan assets are amortized over future periods. 
 
The accumulated benefit obligation for all domestic and international defined benefit pension plans was $255,935 and $174,273 as of December 31, 2019 and $288,223 and $171,384 as of December 31, 2018, respectively. As of December 31, 2019, the fair value of plan assets for three of the Company’s defined benefit plans exceeded the projected benefit obligations of $269,392 by $4,564.
The components of net periodic benefit (income) cost for the Company’s defined benefit plans were as follows:
 
 Year Ended December 31,
 
2019
 
2018
 
2017
 
 U.S.
 
 Non-U.S.
 
 U.S.
 
 Non-U.S.
 
 U.S.
 
 Non-U.S.
Service cost
$
809

 
$
3,893

 
$
852

 
$
4,383

 
$
814

 
$
4,025

Interest cost
10,955

 
4,037

 
10,824

 
4,207

 
11,700

 
4,341

Expected return on plan assets
(16,353
)
 
(2,400
)
 
(17,414
)
 
(2,178
)
 
(16,012
)
 
(2,617
)
Amortization of prior service cost and actuarial loss
2,914

 
2,373

 
2,403

 
2,646

 
1,871

 
2,898

Settlements
15,247

 
572

 
—

 
775

 
—

 
6,427

Other
—

 
956

 
—

 
—

 
—

 
—

Net periodic benefit (income) cost
$
13,572

 
$
9,431

 
$
(3,335
)
 
$
9,833

 
$
(1,627
)
 
$
15,074


Pension Settlements
During the year ended December 31, 2019, the Company undertook an initiative to de-risk pension obligations in the U.S. by purchasing a bulk annuity policy utilizing plan assets, which was designed to match the liabilities of the plan. The resulting non-cash settlement charge of $15,247 was recorded in pension settlement charges, and administrative expenses of $178 were recorded in selling, administration & engineering expenses in the consolidated statements of net income. As a result of the settlement, the Company’s overall projected benefit obligation as of December 31, 2019 was reduced by $58,198.
In addition to the settlements shown in the table above, the Company recognized $2,730 of Non-U.S. pension settlement charges due to the divestiture of the Company’s AVS product line during the year ended December 31, 2019. See Note 5. “Divestiture.” The charges are recorded as a reduction to gain on sale of business in the consolidated statements of net income.
During 2016, the Company undertook an initiative to de-risk pension obligations in the U.K. by purchasing a bulk annuity policy designed to match the liabilities of the plan, and subsequently entered into a wind-up process. During the year ended December 31, 2017, the Company completed the wind-up process, resulting in a non-cash settlement charge of $5,717 and administrative expenses of $185, recorded in pension settlement charges and selling, administration & engineering expenses, respectively, in the consolidated statements of net income. As a result of the settlement, the Company’s overall projected benefit obligation as of December 31, 2016 was reduced by $17,100.
Plan Assumptions
Weighted average assumptions used to determine benefit obligations as of December 31, 2019 and 2018 were as follows:
 
 
2019
 
2018
 
 U.S.
 
 Non-U.S.
 
 U.S.
 
 Non-U.S.
Discount rate
3.28
%
 
1.79
%
 
4.25
%
 
2.34
%
Rate of compensation increase
N/A

 
1.33
%
 
N/A

 
2.99
%

Weighted average assumptions used to determine net periodic benefit costs for the years ended December 31, 2019, 2018 and 2017 were as follows:
 
2019
 
2018
 
2017
 
 U.S.
 
 Non-U.S.
 
 U.S.
 
 Non-U.S.
 
 U.S.
 
 Non-U.S.
Discount rate
4.25
%
 
2.40
%
 
3.55
%
 
2.17
%
 
3.99
%
 
2.23
%
Expected return on plan assets
6.50
%
 
4.63
%
 
6.50
%
 
5.82
%
 
6.60
%
 
5.94
%
Rate of compensation increase
N/A

 
3.31
%
 
N/A

 
3.17
%
 
N/A

 
3.15
%

To develop the expected return on plan assets assumption, the Company considered the historical returns and the future expected returns for each asset class, as well as the target asset allocation of the pension portfolio. As the U.S. plans are frozen, the rate of compensation increase was not applicable in determining net periodic benefit cost.
Plan Assets
The goals and investment objectives of the asset strategy are to ensure that there is an adequate level of assets to meet benefit obligations to participants and retirees over the life of the participants and maintain liquidity in the plan assets sufficient to cover monthly benefit obligations. Risk is managed by investing in a broad range of investment vehicles, e.g., equity mutual funds, bond mutual funds, real estate mutual funds, hedge funds, etc. There are no equity securities of the Company in the equity asset category.
Investments in equity securities and debt securities are valued at fair value using a market approach and observable inputs, such as quoted market prices in active markets (Level 1). Investments in balanced funds are valued at fair value using a market approach and inputs that are primarily directly or indirectly observable (Level 2). Investments in equity securities and balanced funds in which the Company holds participation units in a fund, the net asset value of which is based on the underlying assets and liabilities of the respective fund, are considered an unobservable input (Level 3). Investments in real estate funds are primarily valued at net asset value depending on the investment.
The fair value of the Company’s pension plan assets by category using the three-level hierarchy (see Note 12. “Fair Value Measurements and Financial Instruments”) as of December 31, 2019 and 2018 was as follows:
2019
 
Level 1
 
Level 2
 
Assets measured at NAV (1)
 
Total
Equity funds
 
$
16,613

 
$
20,126

 
$
—

 
$
36,739

Equity funds measured at net asset value
 
—

 
—

 
101,053

 
101,053

Bond funds
 
—

 
34,680

 
—

 
34,680

Bond funds measured at net asset value
 
—

 
—

 
98,967

 
98,967

Real estate measured at net asset value
 
—

 
—

 
25,425

 
25,425

Cash and cash equivalents
 
2,555

 
—

 
—

 
2,555

Total
 
$
19,168

 
$
54,806

 
$
225,445

 
$
299,419

 
2018
 
Level 1
 
Level 2
 
Assets measured at NAV (1)
 
Total
Equity funds
 
$
15,991

 
$
20,026

 
$
—

 
$
36,017

Equity funds measured at net asset value
 
—

 
—

 
103,105

 
103,105

Bond funds
 
3,104

 
27,666

 
—

 
30,770

Bond funds measured at net asset value
 
—

 
—

 
109,372

 
109,372

Real estate measured at net asset value
 
—

 
—

 
30,520

 
30,520

Cash and cash equivalents
 
2,927

 
—

 
—

 
2,927

Total
 
$
22,022

 
$
47,692

 
$
242,997

 
$
312,711


(1) Certain assets that are measured at fair value using the NAV per share (or its equivalent) practical expedient have not been classified in the fair value hierarchy. These assets are included in this table to present total pension plan assets at fair value.
There were no transfers of Level 3 assets and no Level 3 assets in the ending balance for the year ended December 31, 2019. The reconciliation for Level 3 investment transfers for the year ended December 31, 2018 is as follows:
Beginning balance of assets classified as Level 3 as of January 1, 2018
$
110

Transfers into (out of) Level 3
(110
)
Ending balance of assets classified as Level 3 as of December 31, 2018
—


Expected Future Benefit Payments
The Company estimates its benefit payments for domestic and foreign pension plans during the next ten years to be as follows:
 
Years Ending December 31,
 U.S.
 
 Non-U.S.
 
 Total
2020
$
16,721

 
$
6,504

 
$
23,225

2021
14,756

 
6,208

 
20,964

2022
15,475

 
29,264

 
44,739

2023
14,761

 
7,035

 
21,796

2024
15,477

 
7,717

 
23,194

2025 - 2029
75,448

 
41,698

 
117,146


Contributions
The Company made a discretionary contribution of $15,000 in the third quarter of 2018. The Company estimates it will make minimum funding cash contributions of approximately $3,600 to its U.S. pension plans and minimum funding cash contributions of approximately $4,900 to its non-U.S. pension plans in 2020.